TY  - JOUR
AU  - Chen, Brian S
AU  - Hanson, Samuel G
AU  - Stein, Jeremy C
TI  - The Decline of Big-Bank Lending to Small Business: Dynamic Impacts on Local Credit and Labor Markets
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 23843
PY  - 2017
Y2  - September 2017
DO  - 10.3386/w23843
UR  - http://www.nber.org/papers/w23843
L1  - http://www.nber.org/papers/w23843.pdf
N1  - Author contact info:
Brian S. Chen
Department of Economics, Harvard University
1805 Cambridge Stree
Cambridge, MA 02138
E-Mail: brian.s.chen@gmail.com

Samuel Hanson
Harvard Business School
Baker Library 361
Soldiers Field
Boston, MA 02163
Tel: 617/495-6137
E-Mail: shanson@hbs.edu

Jeremy C. Stein
Department of Economics
Harvard University
Littauer 209
Cambridge, MA  02138
Tel: 617/496-6455
E-Mail: jeremy_stein@harvard.edu
AB  - Small business lending by the four largest banks fell sharply relative to others in 2008 and remained depressed through 2014. We explore the dynamic adjustment process following this credit supply shock. In counties where the largest banks had a high market share, the aggregate flow of small business credit fell, interest rates rose, fewer businesses expanded, unemployment rose, and wages fell from 2006 to 2010. While the flow of credit recovered after 2010 as other lenders slowly filled the void, interest rates remain elevated. Although unemployment returns to normal by 2014, the effect on wages persists in these areas.
ER  -